"I Want To Sue The Bastards!!"

That's what buyers say when they discover problems after taking over a property.  “The seller knew about the flooding basement/mice in the attic/leaking roof.”  When these kinds of questions come our way here at RMLO, we turn to our resident litigator, Neil Fenna, BA, LLM. Neil is a go-to-court lawyer; he doesn't do anything else.  He is crisp, very sharp and of little humour, which I think is important in a litigator.  With 20 + years’ experience, Neil has won numerous, high-profile reported cases.  If you have a problem where the only resolution is going to court, contact Neil.  Expect to pay a retainer and get prompt action.

Most things we buy (even used cars!) come with some form of guarantee or other protection from loss.  Unfortunately, used real estate isn’t one of them.  Apart from very narrow exceptions, you are truly on your own when it comes to dealing with issues that arise with a property after closing.  This post discusses your limited options when trouble arises after you get the keys to your new property.

As part of your diligence, you most likely would have had a property inspection done by a professional inspection company.  This may lead you to think that the inspection outfit will be responsible for things they “miss”.  This thinking would be wrong.

As discussed elsewhere in this blog, the contract you sign with the inspection company will clearly define the responsibility of the company and tightly restrict their liability.  Chances are pretty good that anything not discussed in their report is excluded from their scope of work and therefore not covered by their guarantee of workmanship.

Well, if the home inspector is not responsible, shouldn’t the seller be? Not likely.  The ancient Roman legal concept of caveat emptor (“buyer beware”) is alive and well in our modern legal system, at least as it applies to buying properties.  Another ancient legal principle is that contracts regarding land must be in writing to be enforceable.

Put together, this means that you can’t completely count on any representations, either by the seller or the seller’s agent, regarding anything about the property apart from what is expressly stated in the contract.  If you want assurance about something not included in the standard representation and warranty provisions in the printed form contract, you must have seller sign-off, either by way of amendments to the printed form or a separate schedule.

Are there exceptions to this draconian state of affairs?  Of course - our legal system is built on exceptions.  The best known relates to “latent defects”, which are problems with a property that cannot be detected without “destructive testing”.  If the unequivocal evidence shows that the seller concealed a problem, such as by drywalling over major foundation cracks, you may have a claim for the costs of repairing the foundation.  BUT, because of the requirement of contractual privity (the principle dictates that an individual cannot sue on a contract to which he or she was not a party), you must be able to prove that it was your seller, and not a previous owner, who committed the dastardly deed.

Another exception to the caveat emptor rule is the existence of a latent danger on the property, whether or not the seller is aware of it.  However, most properties in our area aren’t sitting on unexploded artillery shells, so instances of this situation are few and far between.  A recent Alberta court decision considered a buried former municipal garbage dump to be a defect rather than a danger.

The lesson here is that you can’t count on anyone else being held responsible for problems with your newly acquired property unless you had the issue specifically covered off in your purchase contract.  So the clear focus must be on completing a comprehensive due diligence process before you sign off on condition removal.   If you still believe you have grounds for a claim, we would be pleased to review it with you.

JOINT VENTURE PRESENTATION OVERLOAD

We all do it, overwhelm our potential new JV investor with paper and PowerPoints.

We know so much about our strategy and properties that we just can't resist making sure our newfound potential investor really gets the picture. Statistics, charts and reams of detail are thrown at someone who doesn't have a clue about investment real estate and joint ventures.

Five minutes after you start your one-hour presentation you can see their eyes glaze over. Uh oh, this isn't going well...  How about a different approach?

Summarize Your Proposition Under Five Headings Or Five Power Point Slides

Have all the background detail you want for extra questions but keep the presentation simple and straightforward.

Number 1. Who are you? Investors buy or buy into the person.  It's not how brilliant you are or how fabulous your presentation is, it's YOU. They are buying YOU. This is probably the most important thing to understand when presenting a JV opportunity. Find a way to let your investor see who you are. There are many ways of doing this. One classic method is to make sure your investor does most of the talking when establishing your relationship. Somehow, them doing all the talking makes you look good. And, of course, you are good!!

Number two. What is your strategy? What area are you specializing in? And, most important, how will your strategy solve their problem? (more cash flow now, a better retirement picture later…)

Number three. Why would your strategy work? Here's where you provide some evidence. It works especially well if you already own investment properties. Show why an investment in your already acquired properties or in similar new properties makes brilliant investment sense.

Number four. Is your strategy repeatable? Most investors don't want just one property because that won't solve their problems. Show why, how, and in what time frame you can repeat your strategy.

Number five. What is the exit plan? Investors want to know the timeframe for cashing out and achieving your collective JV objectives.

SUMMARY: You can have a briefcase full of backup material. But, if you make your presentation around these five items, whether paper or PowerPoint, we think you have a much better chance of getting the cheque.

 Want RMLO To Help With Your JV Document?  We Can Do That.

Note, we don’t comment on templates or individual clauses.   Our approach is to do the only job we know how to do.  That is, a complete, thorough analysis of you and your situation. Next, we review those critical JV clauses (and there are lots of them!)   Then, we create your custom JV.  Call or email for a consultation.

Want To Rezone A Property? Diligence is Crucial!

From time to time, my clients come in and they're all excited!  They've found a piece of property and it's zoned for one use but it would be so much better if it was zoned for a different use. For example, a property zoned for duplexes would be way better if you could build  a 4 plex.

“Barry, how much trouble is it to rezone this property so I can build a 4 plex?  There are already a couple of 4 plexes on the block. Give me an estimate of how much time it will take, how much it will cost?”

My response is that, generally, the very first step for any thoughts on rezoning are to contact the municipality and find out the rules. Actually get and read a copy of the zoning bylaw. And, I always say that in my experience, rezoning takes a bunch of time, trouble and money and is NEVER guaranteed.

I was reminded of rezoning issues when I read a story in the Globe and Mail on Saturday, April 28, 2012 entitled, "Toronto hospice all tangled up in red tape". The Toronto Commandery Hospice has been trying for eight years to get permission to build a critically needed 10 bed hospice to provide palliative care for terminally ill patients. Along with the 10 palliative care beds there would be a garden, a large kitchen for families to cook and meet, a room to sit and contemplate and a prayer room. The land has been donated and they have provincial funding for nursing staff. Their location is in an industrially zoned area (so they need rezoning) very near an existing long-term care home and there is no opposition from local businesses.

But, after eight years, they are no closer to obtaining the rezoning which would allow the project to go ahead. There is no actual zoning category for a hospice, bureaucrats throw up endless red tape and no one is helpful. Folks, we’re talking about your sister or my father having a dignified, pain free death. You would think that with the land available, funding and no objections from residents, rezoning would be a snap. Not so and it's worthwhile reading the article.

Keep this in mind before buying any property with thoughts of rezoning. NEVER go hard on a deal unless you KNOW you can re-zone.

Heads Up, we've moved. New address below. Phone, fax and email are the same.

Barry C. McGuire

RMLO Barristers & Solicitors

MacCosham Building

Suite 101, 10301-109 ST NW

Edmonton, AB T5J 1N4